The Bold Voice of J&K

China stocks plunge over 7 per cent, trigger market halt

0 46

China stocks plunge over 7 per cent, trigger market haltShanghai: China’s stock markets today experienced shortest trading day in its history as shares tumbled over seven per cent within the first 30 minutes of trading, triggering an automatic “circuit breaker”, as the Chinese currency slid to its weakest point since 2011.

Trading on China’s stock markets were suspended for the rest of the day, for the second time this week. A similar plunge on Monday triggered the circuit breaker, the first day the mechanism came into effect.

The mechanism follows the Hushen 300 Index, which reflects the performance of bluechips listed in Shanghai and Shenzhen.

When the index rises or falls by five per cent, the circuit breaker imposes a 15-minute suspension in trading.

If the Hushen 300 declines by over seven per cent, trading is halted for the day.

At 9:42 am, trading was suspended for 15 minutes after the Hushen 300 dropped by over 5 per cent. The index dived a further 2 per cent in just 2 minutes after reopening at 9:57 am and trading was ceased.

In the end, the Hushen 300 Index plunged 7.21 per cent to close at 3,284.74 points.

The benchmark Shanghai Composite Index was down 7.32 per cent to close at 3,115.89 points. The smaller Shenzhen index lost 8.35 per cent to close at 10745.47 points.

The ChiNext Index, China’s NASDAQ-style board of growth enterprises, dropped 8.66 per cent to close at 2,254.52 points, state-run Xinhua news agency reported.

Also the central parity rate of the Chinese currency, the renminbi or yuan, depreciated to its weakest point in nearly five years according to the new data.

The yuan’s central parity rate lost 332 basis points to 6.5646 against the US dollar today, the lowest level since March 18, 2011, data from the China Foreign Exchange Trading System (CFETS) showed.

As of the end of 2015, the CFETS exchange rate composite index, which measures the yuan’s strength relative to a basket of 13 foreign currencies, stood at 100.94, up 0.94 per cent from the end of previous year.

In China’s spot foreign exchange market, the yuan is allowed to rise or fall by 2 percent from the central parity rate each trading day.

The central parity rate of the yuan against the US dollar is based on a weighted average of prices offered by market makers before the opening of the interbank market each business day.

The stock market crashes followed fears sparked by reports this week that the world’s second largest economy was headed for further slowdown.


Leave a comment
WP Twitter Auto Publish Powered By :